Sales commission at the London estate agency Foxtons slid by more than a quarter at the end of last year, in the latest sign that the capital’s runaway housing market is cooling.
Foxtons said it does not anticipate a recovery in sales volumes until after the general election in May.
Foxtons said turnover fell 12.1% in the final quarter of last year, as the slump in sales commissions more than offset a recovery in lettings. Commissions were down 25.7% from the end of 2013 when the London market was operating at its highest level since 2008. Foxtons still made sales commissions totalling £70m over 2014 as a whole, up 3.6% on 2013.
Foxtons warned of a fall in annual profits in October after signalling a slowdown in the London market since August, but the speed of the decline surprised the City. Rival estate agent Countrywide said last week that a slowdown in the UK housing market was “clearly evident” in the final quarter of 2014.
As well as uncertainty around the election and a possible mansion tax, Foxtons blamed a general slowdown in the London property market following a period of rapid price growth and the introduction of tighter rules on mortgage lenders. The chain charges sales commission of 2.5% with its average sale price put at £545,000 last year.
Central London faces a glut of expensive new homes, with about 54,000 being built or planned, according to research from Property Vision, Lonres and Dataloft. Most of them will be priced around £1m.
Lettings, which account for half of Foxtons’ business, remained flat for much of last year but improved in the fourth quarter, notching up a 7.7% rise.
Foxtons shares fell initially but later recovered to trade 9% higher at 176.05p. The chain was founded by Jon Hunt in Notting Hill in 1981 and floated on the stock market in September 2013. Its shares peaked at 389p in February 2014.
Foxtons is opening five to 10 new branches in London each year. It currently has 51.
Numis analyst Chris Millington said: “While profits were marginally below our estimates and the short-term outlook is somewhat uncertain, we remain of the view that Foxtons long-term attractions remain and once the market recovers the group will make very high margins on incremental revenue.”
